Business Background

Denko Industrial Corp Bhd operates in the Plastics foam products sector. It is engaged in the manufacture and sale of plastic injection moulding and high-precision plastic parts internationally. It operates in four segments: Manufacturing, which is engaged in the manufacture and sale of consumer and industrial products. The Trading segment which is engaged in wholesaling and retailing of foodstuff; Management services, which is engaged in the provision of management services, and investment holding, which holds investments in subsidiaries. It operates through three manufacturing divisions, such as Plastic Division, Packaging Division and Food Division.

bpt1The Foo family bought out Denko's shareholders via reverse takeover and injected two major profit making companies ATA, an assembly manufacturer and Jabco, which specialises in air filter. Combined these two operations would provide substantial profits to the Group as they together with existing subsidiary Winsheng, an injection moulding company are part of Dyson Malaysia supply chain.

ATA is one of Dyson biggest prime contractors which makes various vacuum cleaner models at their plant in Senai, Johor. The other prime contractors listed in Bursa are VS Industry and SKP which also draw most of their profits from Dyson. Jabco at the moment is Dyson sole air filter supplier.

As an indication to future profitability of Denko when once all these 3 companies consolidate their earnings under the Group, VS and SKP would provide a fair measure. Take note that both VS and SKP net profits are in excess of RM100 million each with PE 21 and PE 17 times respectively on the back of 2.8 billion (VS) and 1.8 billion (SKP) turnover.

Also consider this fact. Denko total number of shares is only 104 million. This counter is definitely way under its intrinsic value.

23/08/2017 17:59

bpt1As michaelwong posted on 14/6, syndicates may be suppressing its price at the moment or perhaps we may have to wait for Denko to reveal its full potential profitability before the price start to move upward.

23/08/2017 18:06

ZIHENGbpt1, Foo is using his personal name bought Denko's shares, is he promise he will inject two profit companies to Denko? And i don't think these two companies is fully owned by him.

24/08/2017 09:09

ZIHENGIf i have two very profitable companies, why i want to inject to another company and share profit with public? Unless i have a very good reason and benefit to do so.

24/08/2017 09:12

successor26There is no official announcement that Mr Foo have injected other two companies into Denko. Mr Foo will not make such a wrong move to merge a successful companies with an unprofitable company.

This clearly shows speculators gang up to drive the share price to go up.

I hope public will not get cheated by this gimmicks.

24/08/2017 12:33

ZIHENGFew years ago, when Dato Ong family take over Denko, public also expect that Ong will inject in their profitable family companies, but finally nothing happen. To inject another profitable company, they should do some corporate activities, either right issue or private placement, all need ask $$ with public. Otherwise, don't think they will pump in for free......

24/08/2017 13:31

adamantquestion to all the sifu. why nobody throwing away this stock despite the so "sucky" QR? Why syndicate choose one such as this? And at such a high price. Be reminded that this stock is mind boggling. It has shot from 60 cents all the way up to RM1.3.

P.S Not that i support denko. Its just that i seriously dun get it. Please enlighten this poor soul.

24/08/2017 14:26

successor26Public is being misled by propaganda made by speculators! That is the reason no one is throwing away the stock.

JoshkOn behalf of the Board of Directors of Denko, AmInvestment Bank Berhad wishes to announce that the Company has applied for suspension of trading in the securities of the Company, pending the release of a material announcement.

The request for suspension was made under Paragraph 3.1(a) of Practice Note 2 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”).

Bursa Securities has approved the aforesaid application and trading in the securities of the Company has been suspended with immediate effect.

This announcement is dated 20 October 2017.

20/10/2017 16:42

Money168suspension of trading but still haven't make related announcement? when will resume of trading? monday?

Joshkwith the acquisition, Denko will now have 1.1 billion shares. At RM1.15, current price is slightly over valued.

24/10/2017 08:59

bpt1ATA and Jabco operations will fully reflected once the proposal is carried out. Their prime contractor business with Dyson is comparable to VS and SKP. Dyson brand is wide accepted in Europe and US and command premium price which in turn unlike Japanese, Koreans and Chinese OEMs, their prime contractors enjoy extremely lucrative margins.

bpt1Q2 Jul-Sep result will be nothing spectacular but better than Q1 due to some trading activities with ATA & Jabco, Q3 Oct-Dec Denko combined profits with IMS impaired provided proposal acted on time.

Q4 Jan-Mar, low business months in Dyson supply chain cycle but still higher than Q2 as IMS fully consolidated.

Next financial year will show full profitability. Profit will be > RM100 million at least unless they screw up Dyson business. You can confidently work on PE 20 times.

JoshkI wondered where the 1 billion new shares for the acquisition come from. Will it be fundraising from the public? The 1 billion new shares cannot be created from nothing. So, once the fund raising starts, I foresee the price will drop. Can anyone advise?

yingchaiNegative point: -Earning Per Share only 6 cent (riding on RM70Mil/1.13bil) -Will ask for more money from investors -Have to keep for years only can enjoy the good profit. -Fair price= RM1.3225 (15% premium @ RM1.15)

HawksVS Industry and SKP Resources have taken off due to increased business from Dyson. Buying into Denko allows one to ride with ATA (once the acquisition by Denko is completed next year), one of the 3 major suppliers to Dyson along with VS and SKP

24/11/2017 19:24

yingchaistill long way to go. The share sales agreement hv to seek for shareholder's approval in EGM. which will takes approximately 3 months... Too much uncertainty and better wait and see. The value buy is RM1.322....

Why pay more????

27/11/2017 15:30

VenFxI like yingchai's sharing here. Very pro , and trust to be very fair without bias. At present market pay slightly higher premium over the deal to be seal in due course. I believe any above 1.53 will attract seller .